SMSF Commercial Loans: Using Your Super to Buy Business Property in 2026
Business owners with self-managed super funds increasingly explore using their super to purchase commercial property, particularly their own business premises. SMSF commercial loans offer a pathway to property ownership within your superannuation structure, but the lending criteria and compliance requirements differ significantly from both residential SMSF loans and standard commercial finance. If you need help, our team of SMSF loan brokers are happy to guide you through the process and answer any questions.
Understanding how SMSF commercial property loans work helps you determine whether this strategy might suit your circumstances.
What is an SMSF Commercial Loan?
An SMSF commercial loan allows the trustees of a self-managed superannuation fund to borrow money to purchase commercial property. Like residential SMSF loans, these operate under a Limited Recourse Borrowing Arrangement (LRBA), the only borrowing structure permitted under superannuation law.
The property is held in a separate bare trust until the loan is fully repaid, protecting your other SMSF assets. If the loan defaults, lenders can only claim against the commercial property itself, not other assets within your super fund.
Common SMSF Commercial Property Scenarios
Business Premises Ownership: The most common use case involves business owners purchasing the premises their business operates from. The business pays rent to the SMSF, effectively transferring business cash flow into the super environment.
Warehouse and Industrial Properties: Manufacturing or distribution businesses often use SMSF loans to purchase warehouses, with the business becoming the tenant.
Retail and Office Spaces: Professional services firms, medical practices, and retail businesses may purchase their shopfronts or office suites through their SMSF.
Mixed-Use Properties: Some properties combine commercial ground floor spaces with residential apartments above, though lending criteria becomes more complex for mixed-use assets.
Key Differences from Residential SMSF Loans
Whilst both fall under LRBA structures, commercial SMSF loans have distinct characteristics:
Loan-to-Value Ratios (LVR): Commercial SMSF loans typically max out at 60-70% LVR, meaning you’ll need a 30-40% deposit from your super fund. This is more conservative than residential SMSF loans (70-80% LVR).
Interest Rates: Commercial SMSF loan rates are typically 1-2% higher than residential rates, reflecting the perceived higher risk and smaller lending market.
Loan Terms: Commercial loans often have shorter terms (15-20 years) compared to residential loans (25-30 years), impacting serviceability calculations.
Lender Availability: The pool of lenders offering commercial SMSF loans is smaller than those offering residential SMSF products. Many mainstream lenders don’t participate in this space at all.
Property Valuations: Commercial valuations are more complex and costly than residential valuations, typically costing $1,500-$5,000 depending on property type and location.
Lease Requirements: Most lenders require a registered lease agreement if your business will be the tenant, with minimum lease terms typically 3-5 years.
Eligibility Requirements
Several factors determine whether your SMSF can access a commercial property loan:
Fund Balance: Most lenders require minimum fund balances of $200,000-$300,000, higher than residential SMSF requirements. The fund needs sufficient liquidity for deposit, stamp duty, legal costs, and ongoing expenses.
Business Tenure: If purchasing business premises, lenders typically want to see the business has been operating for at least 2-3 years with stable or growing revenue.
Serviceability: The SMSF must demonstrate ability to service loan repayments through rental income, ongoing contributions, and existing cash flow. Lenders assess projected rental income conservatively.
Personal Guarantees: All trustees must provide personal guarantees. Your personal financial position and credit history matter, even though the loan sits within the super structure.
Property Type: Not all commercial properties are acceptable. Most lenders prefer standard commercial assets (offices, retail, industrial) over specialised properties like service stations or hotels.
Location: Properties in major metropolitan areas or established commercial precincts are generally more acceptable to lenders than regional or secondary locations.
The Business Premises Purchase Scenario
When using your SMSF to purchase your business premises, specific rules and considerations apply:
Arm’s Length Lease: The lease between your SMSF (landlord) and your business (tenant) must be at market rates. The ATO scrutinises related-party transactions, so rent must reflect genuine market value.
Lease Documentation: You’ll need a properly documented, registered lease agreement. Many lenders require professional lease documentation prepared by commercial lawyers.
Business Structure: The structure matters—if you operate as a sole trader, complexity increases. Companies and trusts as tenants generally make the arrangement cleaner from a compliance perspective.
Rental Income to SMSF: Rent paid by your business becomes income within your SMSF, typically taxed at 15% during accumulation phase. This can be more tax-effective than paying rent to an external landlord with after-tax dollars.
Business Cash Flow Impact: Ensure your business can comfortably afford market-rate rent plus other operating costs. Some businesses find the rental commitment challenging during slower periods.
Tax Considerations for SMSF Commercial Property
Whilst we provide credit assistance rather than tax or investment advice, you should discuss these matters with qualified advisers:
Rental Income Taxation: Commercial rental income within an SMSF is taxed at 15% during accumulation phase and may be tax-free during pension phase (subject to complex rules around segregated assets with debt).
Capital Gains Tax: CGT treatment varies based on whether the fund is in accumulation or pension phase, and whether the property has ever had a pension-phase interest.
GST Considerations: Commercial property transactions often involve GST. Your accountant should advise on GST registration, input tax credits, and the margin scheme.
Deductibility: Interest and expenses related to commercial property are generally deductible within the SMSF, subject to specific rules.
Related-Party Transactions: The ATO carefully monitors related-party transactions. All dealings must be at arm’s length and commercially sensible.
For tax implications specific to your situation, please consult with a qualified accountant who specialises in SMSF taxation and commercial property.
The SMSF Commercial Loan Process
Understanding the timeline helps set realistic expectations:
Initial Assessment (1-2 weeks): We assess your fund’s financial position, review your business circumstances, and determine potential borrowing capacity. Commercial SMSF lending is specialised, so identifying suitable lenders from the outset is crucial.
Property Identification (varies): Whether you’re purchasing existing premises or searching for suitable property, lenders will have specific requirements around property type, location, and tenant profile.
Pre-Approval (2-3 weeks): Given the complexity, obtaining pre-approval before committing to property purchase is advisable. Pre-approval involves detailed assessment of your SMSF, business, and personal financial positions.
Formal Application (3-5 weeks): The application process is more extensive than residential SMSF loans. Documentation includes fund financials, business financial statements, proposed lease agreements, and detailed cash flow projections.
Property Valuation (1-2 weeks): Commercial valuations take longer than residential valuations and involve detailed market analysis and income capitalisation methods.
Legal Structure Setup (2-3 weeks): Your solicitor establishes the bare trust (custodian trust) required to hold the property during the loan term.
Lease Documentation (1-2 weeks): If your business is the tenant, formal lease documentation must be prepared and reviewed by the lender.
Settlement (4-6 weeks from approval): Once approved, you proceed to settlement with all legal structures in place.
The entire process typically takes 12-16 weeks from initial assessment to settlement, longer than residential SMSF loans due to additional complexity.
Costs Associated with SMSF Commercial Loans
Commercial SMSF property purchases involve various costs:
Deposit: Typically 30-40% of the property value from SMSF funds Stamp Duty: Calculated on property value (rates vary by state, often higher for commercial than residential) Legal Fees: Establishing bare trust, conveyancing, and lease documentation ($3,000-$8,000) Lender Fees: Application, establishment, and valuation fees ($1,000-$3,000) Commercial Valuation: Professional valuation required by lenders ($1,500-$5,000) Building and Pest Inspections: More comprehensive for commercial properties ($800-$2,000) SMSF Administration: Ongoing annual costs for fund management, accounting, and audits ($2,500-$5,000+ annually) Insurance: Building, contents, and potentially public liability insurance in bare trust name
These costs are funded from the SMSF, so adequate liquidity beyond the deposit is essential.
Potential Benefits of SMSF Commercial Property Ownership
When structured appropriately and aligned with your broader strategy, SMSF commercial property ownership may offer certain benefits worth discussing with your advisers:
Wealth Transfer: Business cash flow transfers to your super environment through rental payments, potentially benefiting from the 15% tax rate rather than marginal personal tax rates.
Asset Control: Business owners gain security of tenure, avoiding concerns about landlords selling or significantly increasing rent.
Diversification: Your SMSF holdings diversify beyond shares and managed funds into tangible property assets.
Retirement Income: Once debt is repaid, the property may provide tax-effective rental income during retirement, particularly if held in pension phase.
Estate Planning: Commercial property within super can form part of structured estate planning, though this requires professional advice.
When SMSF Commercial Loans Might Not Suit
This strategy isn’t appropriate for all situations:
Insufficient Super Balance: With high deposits (30-40%) plus costs, you typically need $300,000+ in super before this becomes viable.
Business Instability: If your business has inconsistent revenue or uncertain future, taking on debt within super adds risk. Lenders want to see stable, established businesses.
Limited Business Cash Flow: Your business must comfortably afford market-rate rent without compromising operations or growth.
Need for Super Liquidity: Property is illiquid. If you’re approaching retirement and may need to access super, locking funds in commercial property could be problematic.
Complex Property Types: Highly specialised properties (like licensed venues or specific-use facilities) may struggle to find lender acceptance.
Lack of Professional Support: Without access to accountants, financial advisers, and solicitors experienced in SMSF commercial property, compliance risks increase.
Compliance and Investment Strategy Requirements
The ATO requires SMSF trustees to maintain an investment strategy addressing diversification, liquidity, cash flow, and members’ retirement needs. Before proceeding, ensure your fund’s investment strategy supports commercial property investment.
Your investment strategy should consider:
- How commercial property fits within your overall asset allocation
- Whether concentration in one property aligns with diversification principles
- Liquidity requirements for the fund
- Cash flow projections including loan servicing
- Risk management if the business (as tenant) experiences difficulties
- Exit strategies and succession planning
Many trustees engage SMSF administrators or financial advisers to ensure their investment strategy remains compliant and appropriate. We recommend seeking investment advice from a licensed financial adviser regarding whether commercial property investment aligns with your retirement strategy.
Rental Calculations and Serviceability
Lenders assess serviceability using conservative assumptions:
Rental Income: Most lenders assess rental income at 70-80% of market rent, even if your business pays 100%. This buffers for potential vacancy or rental collection issues.
Operating Expenses: Lenders factor in outgoings like council rates, insurance, maintenance, and property management (if applicable).
Interest Coverage Ratios: Many lenders want to see rental income covering at least 1.2-1.5 times the interest cost, providing a serviceability buffer.
SMSF Contributions: Ongoing super contributions may be factored into serviceability calculations, showing the fund’s capacity to support the loan beyond just rental income.
Lease Terms: Longer lease terms with your business generally improve lender comfort, though this must genuinely reflect commercial reality rather than artificial arrangements.
Refinancing and Exit Strategies
Understanding exit options is important before committing:
Loan Repayment: Once the loan is fully repaid, the property transfers from the bare trust to your SMSF outright.
Selling the Property: If you need to exit, selling commercial property can take longer than residential (typically 6-12 months) and may involve capital gains tax.
Changing Tenants: If your business relocates or ceases, finding alternative tenants for your specific property type might be challenging.
Transition to Pension Phase: Moving to pension phase while holding debt requires careful structuring and advice, as tax treatment changes.
Refinancing Options: If your circumstances change, refinancing SMSF commercial loans can be complex due to the limited lender panel.
How a Specialist Broker Can Help
SMSF commercial lending combines three complex areas: commercial property finance, self-managed super fund regulations, and related-party transaction compliance. We support clients exploring this strategy by:
Lender Panel Knowledge: We know which lenders participate in SMSF commercial lending and their specific criteria, saving you time researching or approaching unsuitable lenders.
Scenario Assessment: We help you understand borrowing capacity based on your SMSF balance, business financials, and property details before you commit significant time and cost.
Application Preparation: We guide you through the extensive documentation requirements, coordinating with your accountant and solicitor where needed.
Loan Structuring: We help structure the loan to optimise serviceability while maintaining compliance with LRBA requirements.
Lender Communication: We handle lender queries and negotiations throughout the process, managing the application from assessment to settlement.
Professional Network Referrals: When needed, we can refer you to accountants, financial advisers, and solicitors experienced in SMSF commercial property.
Our expertise is in finding suitable loan solutions for SMSF commercial property purchases and guiding you through the credit process.
Questions to Ask Before Proceeding
Before committing to an SMSF commercial property purchase, consider:
- Does my SMSF have sufficient funds for deposit, costs, and contingencies?
- Have I received advice on whether this aligns with my retirement strategy?
- Can my business comfortably afford market-rate rent?
- What happens to the property if my business circumstances change?
- Do I have professional advisers experienced in SMSF commercial property?
- Have I discussed tax and superannuation implications with my accountant?
- Does this fit within my fund’s investment strategy?
- What are my exit options if circumstances change?
- Am I comfortable with the compliance obligations as an SMSF trustee?
Working with Professional Advisers
Successful SMSF commercial property purchases typically involve coordinated advice from multiple professionals:
Accountant: Essential for SMSF administration, tax advice, lease structuring, and ATO compliance.
Financial Adviser: Can advise whether commercial property investment suits your overall retirement strategy and investment objectives.
Solicitor: Prepares bare trust documentation, handles conveyancing, and drafts lease agreements.
Commercial Broker: Assists with property identification and negotiations if you’re purchasing premises you don’t currently occupy.
Property Valuer: Provides independent market valuations required by lenders.
Broker: We help you navigate the lending landscape and secure appropriate finance for your SMSF commercial property purchase.
Current Market Conditions (2026)
Interest rate environments, lending policies, and commercial property markets evolve. As of early 2026, several factors influence SMSF commercial lending:
- Lender appetite for SMSF commercial loans remains selective, with some institutions tightening criteria
- Commercial property valuations face pressure in certain sectors, particularly secondary office space
- Industrial and warehouse properties generally remain well-supported by lenders
- Interest rate movements continue to impact serviceability calculations
- Compliance scrutiny from the ATO remains robust, particularly around related-party transactions
For current information on lending conditions and lender policies specific to your situation, let’s discuss your circumstances.
Next Steps
If you’re considering using your SMSF to purchase commercial property, particularly business premises, start by:
- Speaking with your accountant about tax and super implications
- Consulting a financial adviser about investment strategy alignment
- Gathering information about your SMSF’s current financial position
- Obtaining a market valuation or appraisal on the property you’re considering
- Having your business financial statements prepared and up to date
For personalised guidance on SMSF commercial loan options, we can assess your fund’s borrowing capacity and identify which lenders might suit your circumstances. We work with business owners navigating this complex lending space, helping them understand their options and guiding them through the application process.
Let’s discuss how we can support your SMSF commercial property journey.